If your company is in an EU country that has adopted vat then you can choose flat rate vat if you wish to simplify your accounting and also be away from presenting vat figures fully detail Vatcheck.com. This scheme allows you to simply calculate a prescribed percentage of your vat inclusive sales as being the final vat figure without going into intricate sale or purchase details, as it is normally required whenever you file vat returns.
For those who have a basic problem of being aware what is vat and foresee problems in maintaining detailed vat accounts then you can certainly opt for the vat flat rate scheme provided you meet the criteria put in place by the tax authorities inside your country. If your organization is situated in the UK then you can go for vat flat rate in case your estimated sales turnover within the next year excluding vat is not over £150,000 or including vat isn’t over £187,500. You can remain under this scheme until your turnover touches £225,000.
Although you will still need to display the vat amount in your vat invoice, you don’t need to keep an in depth account of your vat figures on your sale or purchase when you might need to do under normal vat circumstances. You will, however be unable to go for vat reclaim in case you choose the flat rate vat scheme. UK offers a 1% discount scheme for the first year for businesses that opt for this scheme. In case you offer goods or services that come under different vat rates then you’ll have to apply the top vat rate if you do go for this scheme.
Thus, if you purchase or sell services or goods under reduced vat rates or have to reclaim vat that has recently been paid this scheme would not be suitable for you. However, if you mostly offer goods or services that involve standard vat rates, don’t need to have any vat refund, or engage in retail sale then your vat flat rate scheme would be perfect for both you and your business. You can get added time to concentrate on growing your business rather than passing time on vat calculations while filing your returns would also become simpler.
These rules pertain to businesses choosing the scheme in the UK. You will have to check on eu vat rules in case your business is situated in another eu country. It is possible to join the flat rate vat scheme within your country by checking out the rules and completing the necessary vat form. You will probably must find out the classification of the services and goods so that you can use the appropriate flat vat rate while billing your customers. You can also leave the scheme to migrate to a different vat scheme by informing the relevant vat authorities prior to making your move.
Although the system of vat is fairly simple to apply, you’ll still require services of expert vat agent or consultant to assist you with vat calculations, vat returns and vat refunds. However, in case your business format is fairly simple and you deal in limited goods or services that come under standard vat rates then you can go for the flat rate vat scheme to simplify your accounting.